Question

In a cash flow statement, why are noncash costs added to post-tax income in order to...

In a cash flow statement, why are noncash costs added to post-tax income in order to calculate the net cash flow?

a) Noncash costs are only considered before taxes in the cash flow statement.

b)This accounts for the fact that noncash costs are tax deductible, but that no cash payment actually occurs.

c) Cash flow statements only consider noncash costs after taxes have been calculated.

d)This accounts for the fact that businesses write a check for noncash costs every year.

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Answer #1

ANSWER-

b)This accounts for the fact that noncash costs are tax-deductible, but that no cash payment actually occurs.

Explanation -

Other options do not match the question

(A) Non-cash costs are only considered before taxes in the cash flow statement.

This statement is not true

(c) Cash flow statements only consider non-cash costs after taxes have been calculated.

This option also not true

(d) This accounts for the fact that businesses write a check for noncash costs every year.

also, this option not related to the question.

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